CONTRIBUTION AGREEMENT
between
SUNRISE LEASING CORPORATION
("Contributor")
and
SUNRISE FUNDING CORPORATION I
("Issuer")
Dated as of November 1, 1996
Table of Contents
Section Heading Page
Article 1 Definitions 2
Section 1.01. Defined Terms 2
Article 2 Acquisition of Lease Assets 4
Section 2.01. Authorization and Issuance of Common
Stock by the Issuer 4
Section 2.02. Lease Acquisition 4
Section 2.03. Assumption of Indebtedness by the Issuer 4
Section 2.04. Delivery of Lease Contracts; Filing of
Financing Statements 4
Section 2.05. Servicing of Lease Contracts and Equipment 5
Section 2.06. Review of Lease Contracts 5
Article 3 Representations and Warranties 5
Section 3.01. Representations and Warranties of the
Contributor 5
Section 3.02. Representations and Warranties of the
Issuer 14
Section 3.03. Purchase or Substitution Required upon
Breach of Certain Representations
and Warranties 15
Section 3.04. Requirements for Purchase or Substitution
of Lease Contracts 16
Article 4 Covenants 17
Section 4.01. Contributor Covenants 17
Section 4.02. Issuer Covenants 21
Section 4.03. Assignment of Lease Assets 22
Article 5 Conditions Precedent 22
Section 5.01. Conditions to the Issuer's Obligations 22
Section 5.02. Conditions to the Contributor's Obligations 23
Section 5.03. Conditions to the Issuer's Subsequent
Obligations 24
Section 5.04. Conditions to the Contributor's Subsequent
Obligations 25
Article 6 Term and Termination 25
Section 6.01. Term 25
Section 6.02. Default by the Contributor 25
Article 7 Miscellaneous 26
Section 7.01. Amendments 26
Section 7.02. Governing Law 26
Section 7.03. Notices 26
Section 7.04. Separability Clause 26
Section 7.05. Assignment 26
Section 7.06. Further Assurances 26
Section 7.07. No Waivers; Cumulative Remedies 27
Section 7.08. Binding Effect; Third Party Beneficiaries 27
Section 7.09. Set-Off 27
Section 7.10. Counterparts 27
Annex A -- Form of Supplemental for Substitute Lease Contracts
Schedule I -- Supplemental Lease Schedule for Substitute Lease
Contracts
Exhibit A -- Form of Lease Contract
Exhibit B -- Form of Lease Asset Assignment and Assumption Agreement
Schedule I -- Lease Schedule
Schedule II -- Schedule of Existing Indebtedness
Exhibit C -- Form of Subsequent Lease Asset Assignment and Assumption
Agreement
Schedule I -- Lease Schedule
Schedule II -- Schedule of Existing Indebtedness
This Contribution Agreement, dated as of November 1, 1996 (this
"Agreement"), is entered into by and between Sunrise Leasing Corporation, a
Minnesota corporation (herein, together with its permitted successors and
assigns, the "Contributor"), and Sunrise Funding Corporation I, a Minnesota
corporation (herein, together with its permitted successors and assigns, the
"Issuer").
PRELIMINARY STATEMENT
The Issuer has entered into an Indenture, dated as of November 1, 1996
(as amended and supplemented from time to time, the "Indenture"), with Norwest
Bank Minnesota, National Association, as trustee (herein, together with its
permitted successors and assigns, the "Trustee"), and the Contributor, as
servicer (herein, in such role, together with its permitted successors and
assigns, the "Servicer"), pursuant to which the Issuer intends to issue its
Notes, as provided in the Indenture (the "Notes").
In furtherance thereof, the Issuer and Contributor have entered into
this Agreement to provide for, among other things, the acquisition by the Issuer
of all of the right, title and interest in and to certain Lease Assets. The
Issuer is, and from time to time will be, pledging to the Trustee the proceeds
from the Lease Assets, and the Issuer will be granting to the Trustee a security
interest in the Lease Assets, as security for the Notes. As a precondition to
the effectiveness of this Agreement, the Issuer, the Servicer and the Trustee
will enter into the Servicing Agreement, dated as of November 1, 1996 (as
amended and supplemented from time to time, the "Servicing Agreement"), to
provide for the administration and servicing of the Lease Assets. In connection
with the issuance of the Notes and pursuant to this Agreement, the Contributor
will contribute the Lease Assets to the Issuer. The initial contribution shall
be effected by this Agreement and the Lease Asset Assignment between the Issuer
and the Contributor, and the list of Lease Contracts so conveyed shall be listed
on Schedule I to the Lease Asset Assignment. The subsequent contribution shall
be effected by a Subsequent Lease Asset Assignment between the Issuer and the
Contributor, and the Subsequent Lease Contracts so conveyed will be listed on
Schedule I to such Subsequent Lease Asset Assignment. On the Closing Date, the
Issuer will issue the Common Stock to the Contributor in accordance with the
provisions set forth in this Agreement. As of the date thereof, the parties
contemplate that the Issuer will not issue any additional shares of its common
stock in connection with the conveyance of Subsequent Lease Contracts.
In order to further secure the Notes, the Issuer will grant to the
Trustee a security interest in, among other things, the Issuer's rights derived
under this Agreement and the Servicing Agreement, and the Contributor agrees
that all representations, warranties, covenants and agreements made by it in
this Agreement with respect to the Lease Assets shall also be for the benefit
and security of the Issuer and the Trustee and all holders from time to time of
the Notes. In consideration for contribution and representations, warranties,
covenants and other agreements under this Agreement by the Contributor, the
Contributor will receive all of the Common Stock of the Issuer on the Closing
Date.
Article 1
Definitions
Section 1.01. Defined Terms. For purposes of this Agreement the
following terms shall have the meanings specified herein. Capitalized terms used
herein but not otherwise defined shall have the respective meanings assigned to
such terms in the Indenture or the Purchase Agreement.
"Common Stock" shall mean all of the issued and outstanding shares of
Common Stock of the Issuer, which consists of 1,000 shares having a par value of
$.01 per share.
"Contributor Address" shall mean 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxx Xxxxxx, Xxxxxxxxx 00000.
"Electronic Ledgers" shall mean the electronic master records of all
lease contracts of the Contributor, the Issuer or the Servicer similar to and
including the Lease Contracts.
"Eligible Lease Contract" shall mean a Lease Contract that satisfies
the selection criteria set forth in Section 3.01(a) hereof, provided that with
respect to any Substitute Lease Contract, any reference in such Section to
related Cut-Off Date shall be deemed to refer to the date as of which such
Substitute Lease Contract is conveyed to the Issuer in accordance with Section
3.04 hereof.
"Existing Indebtedness" shall mean, with respect to the Lease
Contracts, the indebtedness that the Contributor shall incur from time to time
which relates to financing of the Lease Contracts and which shall be assumed by
the Issuer on the related Closing Date, all as set forth in Schedule II to the
related Lease Asset Assignment.
"Indenture" shall mean the Indenture, dated as of November 1, 1996, by
and among the Issuer, the Trustee and the Servicer.
"Issuer Address" shall mean 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx
Xxxxxx, Xxxxxxxxx 00000.
"Lease Acquisition Consideration" shall mean, with respect to any Lease
Contract, the Common Stock and the assumption by the Issuer of the Existing
Indebtedness with respect to such Lease Contract, which shall be issued or
assumed, as applicable, by the Issuer to the Contributor on the Closing Date or,
with respect to the Subsequent Lease Contracts, assumed on the Subsequent
Transfer Date.
"Lease Asset Assignment" shall mean the Lease Asset Assignment and
Assumption Agreement, substantially in the form attached hereto as Exhibit B,
which shall be entered into in connection with the conveyance of Lease Assets
from the Contributor to the Issuer on the Closing Date.
"Lease Assets" shall mean all of the Contributor's right, title and
interest in and to (a) the Contributor's rights and interests in Lease
Contracts, the Lease Receivables, and the related Equipment, including the
proceeds of the Lease Contracts, Lease Receivables and the related Equipment and
all payments received on or with respect to the Lease Contracts, Lease
Receivables and the related Equipment and due after the related Cut-Off Date,
(b) the Lease Contract Files, (c) all rights and interests of the Contributor
under each Insurance Policy, if any, related to the Lease Contracts and
Insurance Proceeds, (d) all rights and interests (but none of the obligations)
of the Contributor under the Vendor Agreement, if any, with respect to each
Lease Contract, (e) the Servicing Charges with respect to the Lease Contracts
and (f) all income and proceeds of the foregoing or relating thereto pledged to
the Trustee under the Indenture.
"Lease Contract File" shall mean, with respect to each Lease Contract,
the following documents:
(i) a copy of the Lease Contract;
(ii) evidence of insurance, if any, and any other documents
evidencing or related to any Insurance Policy;
(iii) copies of such documents, if any, that the Contributor
keeps on file in accordance with its customary procedures relating to
an individual Lease Contract, the related Equipment or a Customer;
(iv) evidence that the Customer received the related Equipment
and that the related Equipment was in good working order and acceptable
to the Customer at the time of receipt by the Customer; and
(v) a copy, if applicable, of the related Vendor Agreement.
"Substitute Lease Contract" shall have the meaning set forth in Section
3.04(b) hereof.
"Substitution Criterion" shall have the meaning set forth in Section
3.04(b) hereof.
Article 2
Acquisition of Lease Assets
Section 2.01. Authorization and Issuance of Common Stock by the Issuer.
Subject to all the terms and conditions of this Agreement and in reliance upon
the representations, warranties and covenants set forth in this Agreement, the
Issuer hereby issues to the Contributor the Common Stock. Such Common Stock
shall be issued in the name of, and delivered directly to, the Contributor, and
the Contributor hereby agrees to obtain directly from the Issuer such Common
Stock, all in accordance with the terms of this Agreement.
Section 2.02. Lease Acquisition. In return for the Common Stock and
other rights created by this Agreement, the Contributor hereby transfers,
assigns, sells, grants and contributes, or shall contribute, to the Issuer,
without recourse except as provided in Section 3.03 of this Agreement, on the
Closing Date or the Subsequent Transfer Date, as the case may be, any and all of
the Contributor's respective right, title and interest in and to all of the
Lease Assets set forth on Schedule I to the Lease Asset Assignment or the
Subsequent Lease Assignment, as the case may be. The Contributor hereby
acknowledges that its transfer of the Lease Assets to the Issuer is absolute and
irrevocable, without reservation or retention of any interest whatsoever by the
Contributor.
Section 2.03. Assumption of Indebtedness by the Issuer. By the
execution of the Lease Assignment Agreement or the Subsequent Lease Assignment
Agreement, as applicable, subject to all the terms and conditions of this
Agreement and in reliance upon the representations, warranties and covenants set
forth in this Agreement, on the Closing Date the Issuer hereby agrees to assume
the Existing Indebtedness set forth on Schedule II to the Lease Assignment
Agreement or the Subsequent Lease Assignment Agreement, as applicable, and the
Issuer agrees to pay such Existing Indebtedness with the proceeds of the sale of
the Notes simultaneously with the issuance of the Notes.
'Section 2.04. Delivery of Lease Contracts; Filing of Financing
Statements'. (a) In connection with the Issuer's acquisition of the Lease
Assets, the Contributor, on behalf of the Issuer, shall deliver the original
Lease Contracts to the Trustee so that the Trustee may retain possession thereof
as provided in the Transaction Documents. In addition, the Contributor agrees to
record and file prior to the Closing Date or the Subsequent Transfer Date, as
the case may be (or within ninety (90) days thereafter with respect to the
assignment to the Issuer and thereafter to the Trustee of filings previously
made to perfect a security interest in the Equipment), at its own expense,
financing statements (and thereafter timely continuation statements with respect
to such financing statements) with respect to the applicable Lease Assets, in
accordance with Section 3.01(a)(viii) and Section 4.01(c) hereof.
(b) In connection with each such acquisition, the Contributor shall
promptly, at its own expense, cause any Electronic Ledger maintained by it to be
marked to show which Lease Assets have been acquired by the Issuer in accordance
with this Agreement and transferred by the Issuer to the Trustee in accordance
with the Transaction Documents.
(c) It is the intention of the Contributor and the Issuer that the
Issuer is acquiring full and absolute title to the Lease Assets. If it is
determined, however, that the Contributor has transferred to the Issuer a
security interest in the Lease Assets, then this Agreement shall constitute a
security agreement under applicable law and the Contributor does hereby pledge,
grant and assign to the Issuer a security interest in the Lease Assets.
Section 2.05. Servicing of Lease Contracts and Equipment. The Servicer
shall service the Lease Contracts and the other Lease Assets for the benefit of
the Issuer (and its successors and assigns) in accordance with the terms and
conditions of the Transaction Documents. Notwithstanding the foregoing, the
Contributor acknowledges and agrees that its obligations under this Agreement
are independent of any obligations it may have as Servicer and that its
obligations under this Agreement will continue in full force and effect, whether
or not it is acting as Servicer, until termination of this Agreement in
accordance with Section 6.01 hereof, unless otherwise provided herein.
Section 2.06. Review of Lease Contracts. If the Contributor or the
Trustee (who shall thereupon notify the Contributor and the Issuer) discovers
that any Lease Contracts are missing or defective (that is, mutilated, damaged,
defaced, incomplete, improperly dated, clearly forged or otherwise physically
altered) in any material respect, the Contributor shall correct or cure such
omission, defect or other irregularity within thirty (30) days from the date the
Contributor discovered such omission or defect, or from the date the Contributor
is notified by the Trustee of such omission or defect. In the event the
Contributor is unable to correct or cure such omission, defect or irregularity
within the thirty (30) day period described in the preceding sentence, the
Contributor shall purchase or replace such Lease Contract from the Issuer in
accordance with Section 3.03 hereof.
Article 3
Representations and Warranties
Section 3.01. Representations and Warranties of the Contributor. The
Contributor hereby makes the following representations and warranties to the
Issuer and for the benefit of the Issuer, the Trustee and Holders of the Notes,
on which the Issuer relies in acquiring the Lease Assets and on which the
Holders rely in purchasing the Notes. Such representations and warranties shall
survive any subsequent transfer, assignment, contribution or conveyance of the
Lease Contracts, Lease Receivables and the related Equipment and any issuance of
Notes.
(a) As to each Lease Contract, as of the Closing Date with respect to
Lease Contracts identified on the Lease Schedule on the Closing Date, and as of
the Subsequent Transfer Date with respect to Subsequent Lease Contracts:
(i) The information set forth in the Lease Schedule is true
and correct as of the related Cut-Off Date.
(ii) The Lease Contract is pursuant to its terms an absolute
and unconditional obligation of the Customer, non-cancelable and
non-prepayable prior to the expiration of the initial term of such
Lease Contract; except as set forth in the Disclosure Schedule, such
Lease Contract does not provide for the substitution, exchange or
addition of any other items of Equipment pursuant to such Lease
Contract; and the rights with respect to such Lease Contract are
assignable by the lessor thereunder without the consent of any Person.
Such Lease Contract is net to the lessor of any maintenance, taxes,
insurance or other expenses and contains provisions requiring the
Customer to assume all risk of loss or malfunction of the related
Equipment.
(iii) The Contributor has heretofore provided to the Trustee
the sole original counterpart of the Lease Contract, as amended, that
constitutes "chattel paper" for purposes of Sections 9-105(1)(b), 9-305
and 9-308 of the UCC and the terms of such Lease Contract has not been
amended, waived or modified subsequent to the above being provided to
the Trustee, and if another original counterpart of such Lease Contract
should subsequently come into the possession of the Contributor, it
will also be so provided to the Trustee.
(iv) There is only one original executed counterpart of the
Lease Contract that constitutes "chattel paper" for purposes of section
9-105(l)(b) and 9-308 of the UCC, and the Electronic Ledgers have been
marked as provided in Section 2.04(b) hereof.
(v) The Lease Contract was not originated in, nor is it
subject to the laws of, any jurisdiction, the laws of which would make
unlawful the sale, transfer or assignment of such document under any of
the Transaction Documents, including any repurchase in accordance with
the Transaction Documents.
(vi) The Lease Contract is in full force and effect in
accordance with its respective terms and neither the Contributor nor
any Customer has or will have suspended or reduced any payments or
obligations due or to become due thereunder by reason of a default by
the other party to such Lease Contract; as of the related Cut-Off Date,
no scheduled payment with respect to such Lease Contract has not been
received and remains unpaid for a period of ninety (90) or more days as
of the Closing Date or the Subsequent Transfer Date, as the case may be
(without regard to advances, if any, made by the Servicer), and there
are no proceedings pending, or to the best of the Contributor's
knowledge, threatened asserting insolvency of such Customer; there has
been no other material default, breach or violation and no event
permitting acceleration under such Lease Contract; there are no
proceedings pending, or to the best of the Contributor's knowledge,
threatened, wherein such Customer or any governmental agency has
alleged that such Lease Contract is illegal or unenforceable; and none
of the related Scheduled Payments are subject to any set-off or credit
of any kind.
(vii) The Lease Contract is the valid, binding and legally
enforceable obligation of the parties thereto, enforceable in
accordance with its terms, subject, as to enforcement, to applicable
bankruptcy, insolvency, reorganization and other similar laws of
general applicability relating to or affecting creditors' rights
generally and to general principles of equity regardless of whether
enforcement is sought in a court of law or equity.
(viii) Within three Business Days of the Closing Date, all
actions, filings (including UCC filings) and recordings as are required
by the Indenture and that may be necessary to perfect a first priority
security interest of the Issuer and the Trustee in, or the contribution
by the Contributor to the Issuer of, the Lease Contract, the related
Lease Receivables and the related Equipment (except with respect to the
security interest in Equipment relating to Lease Contracts which had an
initial balance of less than $15,000) being acquired hereunder have
been accomplished and are in full force and effect.
(ix) The Lease Contract being acquired by the Issuer is
identical to one of the form lease contracts attached as Exhibit A
hereto, except for such immaterial modifications or deviations from the
form lease contract which appear in such Lease Contract or which may
appear in a future form Lease Contract of the Contributor, which
immaterial modifications or deviations will not have a material adverse
effect on the Holders of the Notes.
(x) The Lease Contract was originated by the Contributor in
the Contributor's ordinary course of business and meets the
Contributor's credit rating system. The origination and collection
practices used by the Contributor and any third-party originator with
respect to such Lease Contract have been in all respects legal, proper,
prudent and customary in the equipment leasing and servicing business.
(xi) The Equipment related to the Lease Contract was properly
delivered to the Customer in good repair, without defects and in
satisfactory order and, to the best knowledge of the Contributor, is in
proper working order as of the related Cut-Off Date. The related
Customer has accepted the Equipment leased to it and, after reasonable
opportunity to inspect and test such Equipment, has not notified the
Contributor of any defects therein.
(xii) The Lease Receivable is under a Lease Contract that has
an original term to the last Scheduled Payment Date of not more than
eighty (80) months and not less than 1 month, and a Lease Contract may
have a remaining term of more than thirty-nine (39) months provided
that no more than 39 payments of such Lease Contract are Scheduled
Payments.
(xiii) The Lease Contract obligates the related Customer to
make all Scheduled Payments thereunder in full notwithstanding the
collection by the lessor of a security deposit with respect thereto.
The calculation of the Implicit Principal Balance of the related Lease
Receivable does not include any security deposits or advance payments
collected by or on behalf of the Lessor which are applied to Scheduled
Payments.
(xiv) The Customer does not lease such Equipment to a third
party.
(xv) All requirements of applicable federal, State and local
laws, and regulations thereunder, including, without limitation, usury
laws, if any, in respect of the Lease Contract have been complied with
in all material respects, and such Lease Contract complied in all
material respects at the time it was originated or made and now
complies in all material respects with all legal requirements of the
jurisdiction in which it was originated.
(xvi) With the sole exception of the Customer's right to quiet
enjoyment, each Lease Contract is not and will not be subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, whether arising out of transactions concerning such
Lease Contract or otherwise, and the operation of any of the terms of
such Lease Contract or the exercise by the Contributor or the Customer
of any right under such Lease Contract will not render such Lease
Contract unenforceable in whole or in part, and no such right of
rescission, set-off, counterclaim or defense, including a defense
arising out of a breach of the Customer's right of quiet enjoyment of
the related Equipment, has been asserted with respect thereto, except
that certain rights or defenses may exist under applicable law which,
individually or in the aggregate, do not make the remedies available to
the Contributor with respect to such Lease Contract inadequate for the
practical realization of the benefits provided thereby.
(xvii) Each of the Contributor and any third-party originator
has duly fulfilled all obligations on the lessor's part to be fulfilled
under or in connection with the Lease Contract, including, without
limitation, giving any notices or consents necessary to effect the
acquisition of the Lease Assets by the Issuer and has done nothing to
impair the rights of the Issuer in such Lease Contract or payments with
respect thereto.
(xviii) The Lease Contract and the related Equipment have not
been sold, transferred, assigned or pledged by the Contributor to any
Person other than the Issuer (except for such interests in the Lease
Assets which shall be terminated on or prior to the Closing Date or the
Subsequent Transfer Date), and upon execution and delivery hereof by
the Contributor, the assumption by the Issuer of the related Existing
Indebtedness and the issuance of the Common Stock by the Issuer to the
Contributor, the Issuer will have all of the right, title and interest
in and to the Contributor's interest in such Lease Contract, the
related Lease Receivables and the related Equipment, free and clear of
all liens and encumbrances, except for the interests of the Customer
pursuant to such Lease Contract. Such Lease Contract has not been
satisfied, subordinated or rescinded.
(xix) The Lease Contract requires that the Customer maintain
the related Equipment in working condition, reasonable wear and tear
excepted, in accordance with the manufacturers' specifications and that
the Customer obtain and maintain physical damage insurance covering
such Equipment. Insurance coverage required to be maintained by the
Customer under such Lease Contract, if any, is of a type customary for
the equipment covered thereby and consistent with industry practice for
monitoring compliance thereof; such insurance coverage is in full force
and effect, provided, however, the Contributor may provide such
insurance coverage through its corporate blanket insurance policy,
which policy is in full force and effect. With respect to such a Lease
Contract, the Contributor has named the Issuer as a "loss payee" on
such blanket policy.
(xx) The Contributor has no specific knowledge that the Lease
Contract will not be fully performed in accordance with its terms.
(xxi) No lessee under the Lease Contract is the United States
of America or any state or local government thereof or any agency,
department or instrumentality of the United States of America or any
state or local government thereof.
(xxii) [Reserved].
(xxiii) The Equipment relating to the Lease Contract is not
the subject of any cross-collateralization or other security
arrangement unless all lease contracts applicable to such equipment are
Lease Contracts and all such collateral for such
cross-collateralization or other security arrangement has been pledged
by the Contributor to the Issuer pursuant to this Agreement.
(xxiv) The Customer has made the first payment (which payment
may be an advance payment under such Lease Contract) due under the
Lease Contract within the time set forth in such Lease Contract.
(xxv) The related Equipment and the related Customer are
located in the United States of America, and the related Scheduled
Payments are payable in U.S.
dollars.
(xxvi) The related Scheduled Payments were established at the
time such Lease Contract was originated.
(xxvii) No Customer is an individual person.
(xxviii) The related Equipment is located at the location
specified in such Lease Contract.
(xxix) To the best of the Contributor's knowledge, the
Customer has not subleased any of the related Equipment.
(xxx) There are no unpaid brokerage or other fees owed to
third parties relating to the origination of the Lease Contract.
(b) As to the aggregate pool of Lease Contracts as of the Closing Date
and as of the Subsequent Transfer Date (including those Lease Contracts
contributed to the Issuer on such Subsequent Transfer Date):
(i) The Implicit Principal Balance of any Lease Receivable,
together with the Implicit Principal Balances of any Lease Receivables
relating to any Lease Contracts to the same Customer and its
Affiliates, shall not account for more than three percent (3%) of the
Aggregate Implicit Principal Balance.
(ii) The Contributor used no selection procedures that
identified the Lease Contracts as being less desirable or valuable than
other comparable equipment leases owned by the Contributor.
(c) As to the Contributor as of the Closing Date and the Subsequent
Transfer Date:
(i) The Contributor has been duly organized and is validly
existing and in good standing as a corporation under the laws of the
State of Minnesota with corporate power and authority to own its
properties and to transact the business in which it is now engaged, and
the Contributor is duly qualified to do business in and is in good
standing under the laws of each state in which any Equipment or any
Customer is located or is not required under applicable law to effect
such qualification, except where failure to so qualify would not have a
material adverse effect on the ability of the Contributor to perform
its obligations under the Transaction Documents or on any of the Lease
Contracts, the Lease Receivables or the Equipment or on the ability of
the Contributor, the Issuer or the Trustee to realize upon or enforce
the same.
(ii) The performance of the obligations of the Contributor
under this Agreement and the other Transaction Documents and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in any breach of any of the terms or
provisions of, or constitute with or without notice, lapse of time or
both, a default under the Articles of Incorporation or Bylaws of the
Contributor, or any material indenture, agreement, mortgage, deed of
trust or other instrument to which the Contributor is a party or by
which it is bound, or result in the creation or imposition of any lien,
charge or encumbrance (except the lien created by the Transaction
Documents) upon any of the property or assets of the Contributor
pursuant to the terms of such indenture, mortgage, deed of trust, or
other agreement or instrument to which the Contributor is a party or by
which the Contributor is bound or to which any of the Contributor's
property or assets is subject, nor will such action result in any
violation of the provisions of the Contributor's Articles of
Incorporation or Bylaws or any statute or any order, rule or regulation
of any court or any regulatory authority or other governmental agency
or body having jurisdiction over the Contributor or any of its
properties; and no consent, approval, authorization, order,
registration or qualification of or with or other action of any court,
regulatory authority or other governmental agency or body is required
for consummation of the transactions contemplated by this Agreement and
the other Transaction Documents except such consents, approvals and
authorizations which have been obtained or such registrations or
qualifications which have been made.
(iii) This Agreement and any other Transaction Document to
which the Contributor is a party have been duly authorized, executed
and delivered by the Contributor by all necessary corporate action and
such agreements are the valid and legally binding obligations of the
Contributor, enforceable against the Contributor in accordance with
their respective terms, subject as to enforcement to applicable
bankruptcy, insolvency, reorganization and other similar laws of
general applicability relating to or affecting creditors' rights
generally and to general principles of equity regardless of whether
enforcement is sought in a court of law or equity.
(iv) The Contributor Address is the chief executive office,
principal place of business and the office where the Contributor keeps
its records concerning the Lease Contracts, Lease Receivables and the
related Equipment. Except as set forth in the Disclosure Schedule, the
Contributor has not used any address other than the Contributor Address
in the previous five-year period. The Contributor's legal name is as
set forth in this Agreement. Except as set forth in the Disclosure
Schedule, the Contributor has not used or done business under any other
name in the previous five-year period.
(v) The Contributor does not believe, nor does it have any
reasonable cause to believe, that it cannot perform each and every
covenant contained in this Agreement.
(vi) The transactions contemplated by the Transaction
Documents are being consummated by the Contributor in furtherance of
its ordinary business purposes, with no contemplation of insolvency and
with no intent to hinder, delay or defraud any of its present or future
creditors.
(vii) The consideration received by the Contributor pursuant
to this Agreement is fair consideration having value reasonably
equivalent to or in excess of the value of the performance of the
Contributor's obligations hereunder.
(viii) Neither on the date of the transactions contemplated by
the Transaction Documents or immediately before or after such
transactions, nor as a result of the transactions, will the
Contributor:
(A) be insolvent such that the sum of its debts is
greater than all of its respective property, at a fair
valuation;
(B) be engaged in, or about to engage in, business or
a transaction for which any property remaining with the
Contributor will be an unreasonably small capital or the
remaining assets of the Contributor will be unreasonably small
in relation to its respective business or the transaction; and
(C) have intended to incur, or believed it would
incur, debts that would be beyond its respective ability to
pay as such debts mature or become due. The Contributor's
assets and cash flow enable it to meet its present obligations
in the ordinary course of business as they become due.
(ix) Both immediately before and after the transactions
contemplated by the Transaction Documents (a) the present fair salable
value of the Contributor's assets was or will be in excess of the
amount that will be required to pay its probable liabilities as they
then exist and as they become absolute and matured; and (b) the sum of
the Contributor's assets was or will be greater than the sum of its
debts, valuing its assets at a fair salable value.
(x) The acquisition of the Lease Assets by the Issuer pursuant
to this Agreement is not subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction.
(xi) Except as set forth in the Disclosure Schedule, there are
no proceedings or investigations pending or, to the knowledge of the
Contributor, threatened against or affecting the Contributor in or
before any court, governmental authority or agency or arbitration board
or tribunal (including, but not limited to, any such proceeding or
investigation with respect to any environmental or other liability
resulting from the ownership or use of any of the related Equipment)
which, individually or in the aggregate, involve the possibility of
materially and adversely affecting the properties, business, prospects,
profits or condition (financial or otherwise) of the Contributor, or
the ability of the Contributor to perform its obligations under this
Agreement or the other Transaction Documents. The Contributor is not in
default with respect to any order of any court, governmental authority
or agency or arbitration board or tribunal.
(xii) All tax returns or extensions required to be filed by
the Contributor in any jurisdiction have in fact been filed, and all
taxes, assessments, fees and other governmental charges upon the
Contributor, or upon any of the respective properties, income or
franchises shown to be due and payable on such returns have been, or
will be, paid. All such tax returns are true and correct and the
Contributor has no knowledge of any proposed additional tax assessment
against it in any material amount nor of any basis therefor. The
provisions for taxes on the books of the Contributor are in accordance
with generally accepted accounting principles.
(xiii) The Contributor (a) is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject,
(b) has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property
or to the conduct of its business, and (c) except as set forth in the
Disclosure Schedule is not in violation in any material respect of any
term of any agreement, charter instrument, bylaw or instrument to which
it is a party or by which it may be bound, which violation or failure
to obtain as set forth in items (a)-(c) might materially adversely
affect the business or condition (financial or otherwise) of the
Contributor.
(xiv) The Contributor and the Issuer are members of an
affiliated group, within the meaning of Section 1504 of the Code, which
has filed and will continue to file a consolidated federal income tax
return until termination of the Transaction Documents, and the
Contributor and the Issuer shall each pay their pro rata share of all
taxes shown thereon.
(xv) It is the intention of the Contributor that the Lease
Assets are being or have been acquired by the Issuer and that the
beneficial interest in and title to the Lease Assets are not part of
the Contributor's estate in the event of the filing of a bankruptcy
petition by or against the Contributor under any bankruptcy law.
(xvi) Immediately prior to the acquisition of the Lease Assets
by the Issuer pursuant to this Agreement, the Contributor was the sole
owner of such Lease Assets at such time and had good and marketable
title thereto, free and clear of all liens, claims and encumbrances
(except for the Lease Acquisition Consideration and security interests
in the Lease Assets which shall be terminated on or prior to the
Closing Date or the Subsequent Transfer Date, as the case may be); and
the acquisition of the Lease Assets by the Issuer does not violate the
terms or provisions of any Lease Contract or applicable Vendor
Agreement.
(xvii) Upon the issuance of the Common Stock to the
Contributor in accordance with the terms of this Agreement, the
Contributor will be the registered owner of all of the issued and
outstanding common stock of the Issuer, all of which Common Stock will
be validly issued, fully paid and nonassessable and owned of record,
free and clear of all mortgages, assignments, pledges, security
interests, warrants, options and rights to purchase.
(xviii) The Contributor will treat the transfer of the Lease
Assets as a contribution to the Issuer for federal, State and local
income tax reporting and accounting purposes.
(xix) The transfer of the Lease Assets pursuant to this
Agreement constitutes the valid transfer by the Contributor to the
Issuer of all of the Contributor's right, title and interest in the
Lease Assets.
(xx) The Contributor has valid business reasons for
contributing the Lease Assets to the Issuer pursuant to this Agreement
rather than obtaining a Loan secured by the Lease Assets.
(xxi) The Contributor will be operated generally so as to not
be substantively consolidated with the Issuer.
(xxii) No event has occurred that adversely affects the
Contributor's ability to perform the transactions contemplated by the
Transaction Documents.
(xxiii) Each pension plan or profit sharing plan to which the
Contributor is a party has been fully funded in accordance with the
obligations of the Contributor as set forth in such plan.
Section 3.02. Representations and Warranties of the Issuer. The Issuer
hereby makes the following representations and warranties for the benefit of the
Trustee and Holders of the Notes, on which the Contributor relies in entering
into this Agreement with the Issuer and on which the Holders of the Notes rely
in purchasing the Notes; such representations and warranties speak as of the
Closing Date and the Subsequent Transfer Date unless otherwise indicated, but
shall survive any subsequent transfer, assignment, contribution or conveyance of
the Lease Assets or any part thereof:
(a) The Issuer has been duly organized and is validly existing
in good standing as a corporation under the laws of the State of
Minnesota, with corporate power and authority to own its properties,
perform its obligations under the Transaction Documents and to transact
the business in which it is now engaged or in which it proposes to
engage; the Issuer is duly qualified to do business and is in good
standing in each state in which the nature of its business requires it
to be so qualified, except where failure to so qualify would not have a
material adverse effect on the ability of the Issuer to perform its
obligations under the Transaction Documents.
(b) The transfer to and receipt by the Issuer of the
Contributor's interest in the Lease Contracts, the Lease Receivables
and the related Equipment pursuant to this Agreement and the
consummation of the transactions contemplated herein and in the
Transaction Documents will not conflict with or result in breach of any
of the terms or provisions of, or constitute (with or without notice,
lapse of time or both) a default under the Articles of Incorporation or
Bylaws of the Issuer or any material indenture, agreement, mortgage,
deed of trust or other instrument to which the Issuer is a party or by
which it is bound, or result in the creation or imposition of any lien,
charge or encumbrance (except for the lien created by the Indenture)
upon any of the property or assets of the Issuer pursuant to the terms
of, such indenture, mortgage, deed of trust, or other agreement or
instrument to which the Issuer is a party or by which it is bound or to
which any of the property or assets of the Issuer is subject, nor will
such action result in any violation of the provisions of the Articles
of Incorporation or Bylaws of the Issuer or any statute or any order,
rule or regulation of any court or regulatory authority or other
governmental agency or body having jurisdiction over the Issuer or any
of its properties; and no consent, approval, authorization, order,
registration or qualification of or with or other action of any court,
regulatory authority or other governmental agency or body is required
for the acquisition of the Lease Assets hereunder.
(c) The Transaction Documents to which the Issuer is a party
have been duly authorized, executed and delivered by the Issuer by all
necessary corporate action and constitute valid and legally binding
obligations of the Issuer enforceable against the Issuer in accordance
with their terms, subject as to enforcement to bankruptcy, insolvency,
reorganization and other similar laws of general applicability relating
to or affecting creditors' rights generally and to general principles
of equity regardless of whether enforcement is sought in a court of
equity or law.
(d) There are no proceedings or investigations to which the
Issuer is a party pending or, to the knowledge of the Issuer,
threatened, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality (a) asserting the
invalidity of this Agreement, (b) seeking to prevent the issuance of
the Notes or the consummation of any of the transactions contemplated
by this Agreement, or (c) seeking any determination or ruling that
would materially and adversely affect the performance by the Issuer of
its obligations under, or the validity or enforceability of, this
Agreement.
(e) All approvals, authorizations, consents, orders or other
actions of any Person or of any court, governmental agency or body or
official, required in connection with the execution and delivery of
this Agreement, have been or will be taken or obtained on or prior to
the Closing Date.
(f) The Issuer Address is the principal place of business and
chief executive office of the Issuer.
Section 3.03. Purchase or Substitution Required upon Breach of Certain
Representations and Warranties. Upon discovery by the Contributor or the Issuer
of the breach of any representations or warranties set forth in Section 3.01 or
3.02 hereof which materially and adversely affects the value of a Lease
Contract, Lease Receivable, the related Equipment, or the interests of the
Holders of the Notes, or a breach of any of the representations and warranties
set forth in Sections 3.01(a)(ii), 3.01(a)(v), 3.01(a)(vii) or 3.01(a)(xviii)
hereof, the party discovering such breach shall give prompt written notice to
the other party. The Contributor shall, within thirty (30) days from the date
the Contributor was notified of, or otherwise discovers, such breach, cure such
breach, or, (1) if the breach relates to a particular Lease Contract and is not
cured, either (a) purchase the Issuer's interest in such Lease Contract and the
related Lease Receivable from the Issuer at the Purchase Price or (b) provide a
Substitute Lease Contract or (2) if the breach relates to a representation or
warranty set forth in Section 3.01(b) as a whole and is not cured by the
Contributor, either (a) purchase the Issuer's interest in such non-conforming
Lease Contracts and the related Lease Receivables from the Issuer or (b) provide
Substitute Lease Contracts as set forth above, so that the representations and
warranties with respect to the selection criteria are correct, as evidenced by a
certificate of an officer of the Contributor to the Trustee. The Purchase Price
for a purchased Lease Contract shall be paid, and any Substitute Lease Contract
shall be delivered, by the Contributor to the Issuer in accordance with Section
3.04(c) hereof. It is understood and agreed that the obligation of the
Contributor to cure or purchase or replace any Lease Contract as to which such a
breach has occurred shall constitute the sole remedy respecting such breach
available to the Issuer, the Holders of Notes or the Trustee on behalf of such
Holders (except for any indemnities provided under Section 4.01(j) hereof or
under the Indenture) for any losses, claims, damages and liabilities arising
from the Issuer's interest in such Lease Contract or the inclusion of the
Issuer's interest in such Lease Contract in the Trust Estate.
Section 3.04. Requirements for Purchase or Substitution of Lease
Contracts. (a) If the Contributor is required to purchase the Issuer's interest
in any Lease Contract and the related Lease Receivables under Section 3.03
hereof or if the Issuer is required or elects to purchase the Trustee's interest
in any Lease Contract and the related Lease Receivables under Section 3.10 of
the Servicing Agreement, such Lease Contract and related Lease Receivables shall
be purchased by the Contributor at the Purchase Price. All purchases shall be
accomplished at the times specified in subsection (c) below.
(b) If the Contributor is required to substitute any Lease Contract
under Section 3.03 hereof, or if the Issuer is required or elects to substitute
the Issuer's interest in any Lease Contract and the related Lease Receivable
under Section 3.10 of the Servicing Agreement (a "Substitute Lease Contract"),
each such Substitute Lease Contract shall (i) be an Eligible Lease Contract;
(ii) be with respect to types of Equipment represented in the pool of Lease
Contracts delivered on the date the Substitute Lease Contract is conveyed to the
Issuer, and have Customers in the industries represented in the pool of Lease
Contracts on such date; (iii) be with a Customer whose credit is equal to or
better than that of the Customer under the withdrawn Lease Contract; (iv) be
written on one of the standard lease forms attached as Exhibit A to this
Agreement; (v) be accompanied by (A) a supplement to this Agreement
substantially in the form of Annex A hereto subjecting such Lease Contract to
the provisions hereof and providing with respect to such Substitute Lease
Contract the information required in the Lease Schedule and (B) evidence of the
UCC filings required as set forth in the Indenture; and (vi) not have been
selected using procedures that identified the Lease Contracts as being less
desirable or valuable than other comparable equipment leases owned by the
Contributor. In addition, (i) such Substitute Lease Contracts shall have an
Implicit Principal Balance calculated as of the date of substitution at least
equal to the Implicit Principal Balance of the Lease Contracts being withdrawn
(the "Substitution Criterion") and (ii) the representations and warranties set
forth in Sections 3.01 and 3.02 shall be true and correct with respect to such
Substitute Lease Contract and the aggregate pool of Lease Contracts as of the
date such Substitute Lease Contract is conveyed to the Issuer.
A Substitute Lease Contract may have scheduled payments that are due
after the last day of the month preceding the Stated Maturity of the Notes, but
such payments shall not be counted in any Implicit Principal Balance
computation. Upon a substitution as described in this Section 3.04(b), the
Contributor shall also pay any past due lease payments not received through the
Calculation Date preceding the date on which the substitution occurs. Upon the
substitution of any Substitute Lease Contract pursuant to the provisions of this
Section 3.04(b), the Contributor hereby agrees that such Substitute Lease
Contract will be subject to all the terms and provisions of this Agreement, the
Servicing Agreement and the Indenture just as if such Substitute Lease Contract
had been one of the original Lease Contracts acquired on the Closing Date. Upon
the substitution of a Substitute Lease Contract pursuant to this Section
3.04(b), the Issuer and the Contributor shall also comply with the provisions
and limitations set forth in the Indenture. All substitutions shall be
accomplished at the time specified in subsection (c) below.
(c) Any purchase or substitution of a Lease Contract by the Contributor
in accordance with Section 3.03 hereof or this Section 3.04 or by the Issuer
under Section 3.10 of the Servicing Agreement shall be made either by remittance
of the Purchase Price to the Servicer for deposit into the Collection Account in
accordance with Section 3.03(a) of the Servicing Agreement or by substitution of
a Substitute Lease Contract, as applicable, within one Business Day following
the expiration of the cure period set forth in Section 3.03 hereof.
(d) Any voluntary purchase or substitution of a Lease Contract by the
Issuer pursuant to the terms of the Servicing Agreement or Indenture in the
event of a default, delinquency or modification with respect to such Lease
Contract shall satisfy the same requirements for a purchase or substitution, as
the case may be, as are set forth in this Section 3.04.
Article 4
Covenants
Section 4.01. Contributor Covenants. The Contributor hereby covenants
and agrees with the Issuer as follows:
(a) Except as hereinafter provided, the Contributor will keep in full
effect its existence, rights and franchises as a corporation, and will obtain
and preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Lease Contracts and
to perform its duties hereunder. Any person into which the Contributor may be
merged or consolidated, or to whom the Contributor has sold substantially all of
its assets, or any corporation resulting from any merger, conversion or
consolidation to which the Contributor shall be a party, or any Person
succeeding to the business of the Contributor shall be the successor of the
Contributor hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that (v) the Contributor shall have
obtained the prior written consent of the Holders of at least a majority in
principal amount of the Notes, (w) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.01(c)
hereof shall have been breached, (x) such successor executes an agreement of
assumption, in form reasonably satisfactory to the Trustee, to perform every
obligation under this Agreement, (y) the Contributor shall have delivered to the
Issuer a certificate of an officer of the Contributor and an Opinion of Counsel
each stating that such consolidation, merger, or succession and such agreement
of assumption complies with this Section 4.01 and that all conditions precedent,
if any, provided for in this Agreement relating to such transaction have been
complied with, and (z) the Contributor shall have delivered to the Issuer an
Opinion of Counsel either (1) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Issuer in the Lease Contracts and reciting the details of such
filings, or (2) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest.
(b) Neither the Contributor nor any of the directors, officers,
employees or agents of the Contributor shall be under any liability to the
Issuer, the Trustee or the Holders of Notes for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment not involving recklessness or gross
negligence; provided, however, that this provision shall not protect the
Contributor against any breach of warranties or representations made herein, or
failure to perform its obligations in strict compliance with this Agreement, or
any liability which would otherwise be imposed by reason of any breach of the
terms and conditions of this Agreement. The Contributor, and any director,
officer, employee or agent of the Contributor, may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Contributor shall not be under any
obligation to appear in, prosecute, or defend any legal action that is not
incidental to its obligations as the contributor of the Lease Assets under this
Agreement and that in its opinion may involve it in any expense or liability.
(c) The Contributor will from time to time, at its own expense, execute
and file such additional financing statements (including continuation
statements) as may be necessary to preserve the security interests and liens
described in Section 3.01(a)(viii) hereof and are reasonably satisfactory in
form and substance to the Issuer.
(d) The Contributor will not change its name, identity or corporate
structure in any manner that would, could, or might make any financing statement
or continuation statement misleading within the meaning of section 9-402(7) of
the UCC, unless it shall have given the Issuer and the Trustee at least thirty
(30) days' prior written notice thereof.
(e) The Contributor will give the Issuer and the Trustee at least
thirty (30) days' prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement.
(f) The Contributor will duly fulfill all obligations on its part to be
fulfilled under or in connection with each Lease Contract, will not change or
modify the terms of the Lease Contracts except as expressly permitted by the
terms of the Transaction Documents and will do nothing to impair the rights of
the Issuer or the Trustee in the Lease Assets. In the event that the rights of
the Contributor under any Lease Contract, any guaranty of the related Customer's
obligations under any Lease Contract, or any Insurance Policy are not assignable
to the Issuer, the Contributor will enforce such rights on behalf of the Issuer.
(g) The Contributor will comply, in all material respects, with all
material acts, rules, regulations, orders, decrees and directions of any
governmental authority applicable to the Lease Assets or any part thereof;
provided, however, that the Contributor may contest any act, regulation, order,
decree or direction in any reasonable manner which shall not materially and
adversely affect the rights of the Issuer or the Trustee in the Lease Assets.
(h) The Contributor will advise the Issuer and the Trustee promptly, in
reasonable detail, of the occurrence of any breach by the Contributor following
discovery by the Contributor of such breach of any of its representations,
warranties and covenants contained herein.
(i) The Contributor will execute or endorse, acknowledge, and deliver
to the Issuer and the Trustee from time to time such schedules, confirmatory
assignments, conveyances, and other reassurances or instruments and take such
further similar actions relating to the Lease Assets, and the rights covered by
the Transaction Documents, as the Issuer or the Trustee may reasonably request
to preserve and maintain title to the Lease Assets and the rights of the Trustee
and the Holders of Notes therein against the claims of all persons and parties.
(j) The Contributor agrees to indemnify, defend and hold the Issuer
harmless from and against any and all loss, liability, damage, judgment, claim,
deficiency or expense (including interest, penalties, reasonable attorney's fees
and amounts paid in settlement) that is caused by (i) a material breach at any
time by the Contributor of its representations, warranties and covenants
contained in Section 3.01 hereof or this
Section 4.01 or (ii) any material information furnished by the
Contributor which is set forth in any schedule delivered hereunder, being untrue
in any material respect when any such representation was made or schedule
delivered, provided that the Contributor shall not have any liability with
respect to a representation or warranty as to any specific Lease Contract, Lease
Receivable or related Equipment other than to purchase such Lease Contract or
substitute for such Lease Contract in accordance with Section 3.03 hereof unless
such breach of representation or warranty is the result of the Contributor's
fraud, gross negligence, bad faith or willful misconduct. The Contributor shall
also indemnify the Trustee and the Servicer for any cost or expenses incurred by
them in the enforcement of this Agreement. The obligations of the Contributor
under this Section 4.01(j) shall be considered to have been relied upon by the
Issuer and shall survive the execution, delivery and performance of this
Agreement, regardless of any investigation made by or on behalf of the Issuer,
until termination of the Indenture. If the Contributor has made any indemnity
payments pursuant to this Section 4.01(j) and thereafter the recipient collects
any of such amounts from others, such party will promptly repay the amount
collected to the Contributor, without interest.
(k) The Contributor will do nothing to disturb or impair the
acquisition hereunder by the Issuer of all of the Contributor's right, title and
interest in the Lease Assets.
(l) The Contributor (i) will (A) maintain its books and records
separate from the books and records of the Issuer and (B) maintain bank accounts
separate from those of the Issuer and (ii) will not (x) take any action that
would cause the dissolution or liquidation of the Issuer, (y) guarantee
(directly or indirectly), endorse or otherwise become contingently liable
(directly or indirectly) for the obligations of the Issuer or (iii) institute
against the Issuer, or join any other person in instituting against the Issuer,
any case, proceeding or other action under any existing or future bankruptcy,
insolvency or similar laws. This subsection (1) shall survive termination of
this Agreement.
(m) The Contributor shall notify the Issuer and the Trustee promptly
after becoming aware of any Lien on any Lease Asset.
(n) On each date as of which the Contributor substitutes a Substitute
Lease Contract in accordance with Section 3.03 hereof, the Contributor shall
provide to the Issuer a supplement to this Agreement substantially in the form
of Annex A hereto subjecting such Lease Contract to the provisions hereof and
providing with respect to such Substitute Lease Contract the information
required in the Lease Schedule.
(o) The annual financial statements of the Contributor will disclose
the effects of the transactions contemplated by the Transaction Documents in
accordance with generally accepted accounting principles. The financial
statements of the Contributor and the Issuer will also disclose that the assets
of the Issuer are not available to pay creditors of the Contributor. The
resolutions, agreements and other instruments underlying the Transaction
Documents will be continuously maintained by the Contributor as official
records.
(p) The affiliated group of which the Contributor is a member within
the meaning of Section 1504 of the Code shall treat the Lease Assets as owned by
the Issuer for federal, State and local income tax purposes and shall include in
the computation of the Issuer's gross income for such purposes any of the
Issuer's income from the Lease Assets.
(q) The Contributor will, at its own cost and expense, (i) retain the
Electronic Ledger as a master record of the Lease Contracts, Lease Receivables
and related Equipment and copies of all documents relating to each Lease
Contract (other than the original executed Lease Contracts) as custodian for the
Issuer and other Persons, if any, with interests in the Lease Contracts, Lease
Receivables and related Equipment and (ii) xxxx the Lease Contracts, Lease
Receivables and the Electronic Ledger to the effect that the Lease Contracts,
Lease Receivables and the related Equipment have been acquired by the Issuer and
that such Lease Contracts, Lease Receivables and the related Equipment have been
pledged, transferred and assigned to the Trustee by the Issuer pursuant to the
Indenture.
(r) The Contributor will perform the transactions contemplated by this
Agreement in a manner that is consistent with the Issuer's ownership interest in
the Lease Assets. The Contributor will respond to all third party inquiries
confirming the transfer of the Lease Assets to the Issuer.
(s) The Contributor shall immediately transfer to the Trustee for
deposit in the Collection Account any payment it receives relating to the Lease
Assets.
(t) If the Contributor shall, after the Closing Date, own or service a
lease that is cross-collateralized with a Lease Contract, and the Contributor
forecloses on the collateral relating to such lease, the Contributor shall
repurchase such Lease Contract as if one of the representations and warranties
set forth in Section 3.01 had been breached.
(u) The Contributor will not sell or otherwise transfer the stock of
the Issuer to any other Person, nor will it merge or consolidate with the Issuer
or allow the Issuer to be merged into or consolidated with any Person without
the consent of the holders of a majority in principal amount of the Notes
Outstanding.
Section 4.02. Issuer Covenants. The Issuer hereby covenants and agrees
with the Contributor as follows:
(a) The Issuer hereby acknowledges and agrees that its rights in the
related Equipment are expressly subject to the rights of the related Customers
in such Equipment pursuant to the applicable Lease Contract. The Issuer
covenants and agrees that, so long as a Customer shall not be in default of any
of the provisions of the applicable Lease Contract, neither the Issuer nor any
assignee of the Issuer will disturb the Customer's quiet and peaceful possession
of the related Equipment and the Customer's unrestricted use thereof for its
intended purpose.
(b) On each date as of which any interest in the Lease Contracts are to
be purchased or replaced by the Contributor pursuant to Section 3.03 hereof, the
Issuer shall submit to the Contributor an instrument of assignment assigning the
Issuer's interest in such Lease Contract, Lease Receivable and the related
Equipment to the Contributor, signed by the president, senior vice president or
any vice president of the Issuer. Each such assignment shall operate as an
assignment, without recourse, representation, or warranty, to the Contributor of
all of the Issuer's right, title, and interest in and to such Lease Contract,
Lease Receivable, related Equipment and any security documents relating thereto,
such assignment being an assignment outright and not for security, and upon
payment of the Purchase Price or delivery of a Substitute Lease Contract, the
Contributor will thereupon own such interest in the Lease Contract, Lease
Receivable and all such security and documents, free of any further obligation
to the Issuer with respect thereto. If in any enforcement suit or legal
proceeding it is held that the Contributor may not enforce a Lease Contract on
the ground that it is not a real party in interest or holder entitled to enforce
the Lease Contract, the Issuer shall, at the Issuer's expense, take such steps
as the Issuer deems necessary to enforce the Contract, including bringing suit
in the Issuer's name.
(c) The Issuer warrants that, except as contemplated by the Transaction
Documents, it will have ownership of the Equipment and that it will warrant and
defend title to the Equipment against all Persons, claims and demands
whatsoever. The Issuer shall not assign, sell, pledge, or exchange, or in any
way encumber or otherwise dispose of the Equipment, except as contemplated by or
permitted under the Transaction Documents.
Section 4.03. Assignment of Lease Assets. The Contributor understands
that the Issuer will assign to and grant to the Trustee a security interest in
the Lease Assets. The Contributor consents to such assignments and grants and
further agrees that all representations, warranties, covenants and agreements
the Contributor made herein shall also be for the benefit of and inure to the
Issuer, the Trustee and all Holders from time to time of the Notes.
Article 5
Conditions Precedent
Section 5.01. Conditions to the Issuer's Obligations. The obligations
of the Issuer to execute and deliver the Lease Asset Assignment to the
Contributor on the Closing Date pursuant to, and perform its obligations
pursuant to, this Agreement shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of the Contributor contained in
Sections 3.01(b) and 3.01(c) hereof and all information provided in the Lease
Schedule shall be true and correct on the Closing Date, with the same effect as
though such representations and warranties had been made on such date, and the
Contributor shall have delivered to the Issuer, the Trustee and each original
purchaser of Notes an Officer's Certificate to such effect;
(b) All representations and warranties of the Contributor contained in
Section 3.01(a) hereof shall be true and correct on the Closing Date with
respect to the Lease Contracts listed on the Lease Schedule, with the same
effect as though such representations and warranties had been made on such date,
and the Contributor shall have delivered to the Issuer, the Trustee and each
original purchaser of Notes an Officer's Certificate to such effect;
(c) The Contributor shall have delivered all other information
theretofore required or reasonably requested by the Issuer to be delivered by
the Contributor hereunder, duly certified by an officer of the Contributor, and
the Contributor shall have substantially performed all other obligations
required to be performed as of the Closing Date by the provisions of this
Agreement;
(d) On or prior to the Closing Date, the Contributor shall have
delivered the Lease Contracts identified in the Lease Schedule to the Trustee
and, subject to Section 2.04 hereof, there shall have been made all filings,
recordings and/or registrations, and there shall have been given, or taken, any
notice or any other similar action, as may be necessary in the opinion of the
Issuer, in order to establish and preserve the right, title and interest of the
Issuer in such Lease Contracts and the other Lease Assets;
(e) On or before the Closing Date, the Issuer, the Servicer and the
Trustee shall have entered into the Servicing Agreement;
(f) The Notes shall be issued and sold on the Closing Date, and the
Issuer shall receive the full consideration due it upon the issuance of the
Notes, the Issuer shall have applied such consideration, to the extent
necessary, to pay the related Existing Indebtedness; and
(g) The Contributor shall have executed and delivered the Lease Asset
Assignment.
Section 5.02. Conditions to the Contributor's Obligations. The
obligations of the Contributor to execute and deliver to the Issuer the Lease
Asset Assignment, and perform it obligations pursuant to, this Agreement on the
Closing Date shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Issuer contained in this
Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date;
(b) The Issuer shall have executed and delivered the Lease Asset
Assignment; and
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Contributor, and the Contributor shall
have received from the Issuer copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Contributor may reasonably have requested.
Section 5.03. Issuer's Conditions to any Subsequent Transfer. If the
Issuer elects to execute and deliver the Subsequent Lease Asset Assignment to
the Contributor on the Subsequent Transfer Date, such election shall be subject
to the satisfaction of the following conditions:
(a) The Contributor shall have provided the Trustee, the Issuer, the
Placement Agent and the Servicer with prior written notice of the conveyance of
Subsequent Lease Contracts, the related Subsequent Lease Receivables and the
related Equipment and shall have provided any information reasonably requested
by any of the foregoing with respect to such Subsequent Lease Contract, such
Subsequent Lease Receivables and such Equipment;
(b) The Funding Period shall not have terminated;
(c) All representations and warranties of the Contributor contained in
Sections 3.01(b) and 3.01(c) hereof and all information provided in the Lease
Schedule shall be true and correct on such Subsequent Transfer Date, with the
same effect as though such representations and warranties had been made on such
date, and the Contributor shall have delivered to the Issuer, the Trustee and
each Holder of Notes an Officer's Certificate to such effect;
(d) All representations and warranties of the Contributor contained in
Section 3.01(a) hereof shall be true and correct on such Subsequent Transfer
Date with respect to the Subsequent Lease Contracts listed on the related Lease
Contract Schedule, with the same effect as though such representations and
warranties had been made on such date, and the Contributor shall have delivered
to the Issuer, the Trustee and each Holder of Notes an Officer's Certificate to
such effect;
(e) The Contributor shall have delivered all other information
theretofore required or reasonably requested by the Issuer to be delivered by
the Contributor hereunder, duly certified by an officer of the Contributor, and
the Contributor shall have substantially performed all other obligations
required to be performed as of such Subsequent Transfer Date by the provisions
of this Agreement;
(f) On or prior to such Subsequent Transfer Date, the Contributor shall
have delivered the Subsequent Lease Contracts identified in Schedule I to the
Subsequent Lease Asset Assignment to the Trustee and, subject to Section 2.04
hereof, there shall have been made all filings, recordings and/or registrations,
and there shall have been given, or taken, any notice or any other similar
action as may be necessary in the opinion of the Issuer, in order to establish
and preserve the right, title and interest of the Issuer in such Subsequent
Lease Contracts and the other Lease Assets;
(g) The Issuer shall have caused the Trustee to pay, out of the
Pre-Funding Account, the amount set forth in Section 12.03(d) of the Indenture;
(h) The Contributor shall have executed and delivered the Subsequent
Lease Asset Assignment;
(i) There shall not be a continuing Event of Default, Servicer Event of
Default or a default under this Agreement.
Section 5.04. Contributor's Conditions to any Subsequent Transfer. If
the Contributor elects to execute and deliver to the Issuer the Subsequent Lease
Asset Assignment, such election shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of the Issuer contained in this
Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date;
(b) The Issuer shall have executed and delivered the Subsequent Lease
Asset Assignment; and
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Contributor, and the Contributor shall
have received from the Issuer copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Contributor may reasonably have requested.
Article 6
Term and Termination
Section 6.01. Term. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue in full force and effect until
the later of (i) payment with respect to the last Lease Asset or (ii)
termination of the Indenture.
Section 6.02. Default by the Contributor. If the Contributor shall be
in default under this Agreement and such default shall not have been cured for a
period of sixty (60) days, or if the Contributor shall become insolvent or make
an assignment for the benefit of its creditors or have a receiver appointed for
all or substantially all of its properties, or if any proceedings commenced, or
consented to, by the Contributor are not stayed or dismissed within ninety (90)
days after being commenced against the Contributor under any bankruptcy,
insolvency or other law for the relief of debtors, the Issuer shall have the
right, in addition to any other rights it may have under any applicable law, to
terminate this Agreement upon thirty (30) days' prior written notice to the
Contributor; provided that any termination of this Agreement shall not release
the Contributor from any obligation under this Agreement.
Article 7
Miscellaneous
Section 7.01. Amendments. This Agreement and the rights and obligations
of the parties hereunder may not be changed orally but only by an instrument in
writing signed by the party against which enforcement is sought. This Agreement
may be amended by the Issuer and the Contributor only with the prior written
consent of the Trustee.
Section 7.02. Governing Law. This Agreement shall be construed in
accordance with the internal laws of the State of Minnesota, without regard to
choice of law principles.
Section 7.03. Notices. All demands, notices and communications
hereunder shall be in writing and shall be delivered personally, mailed by
registered or certified United States mail, postage prepaid, or sent via
overnight air courier or facsimile communication and addressed, in the case of
the Contributor, to the Contributor Address, and in the case of the Issuer, to
the Issuer Address. All notices and demands shall be deemed to have been given
either at the time of the delivery thereof to any officer of the Person entitled
to receive such notices and demands at the address of such Person for notices
hereunder, or on the third day after the mailing thereof to such address, as the
case may be. Any Person may change the address for notices hereunder by giving
notice of such change to the other Person.
Section 7.04. Separability Clause. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.05. Assignment. Except as provided in Section 4.01(a), this
Agreement may not be assigned or delegated by the Contributor without the prior
written consent of the Issuer and the Trustee and may not be assigned or
delegated by the Issuer without the prior written consent of the Contributor and
Trustee.
Section 7.06. Further Assurances. Each of the Contributor and the
Issuer agrees to do such further acts and things and to execute and deliver to
the Trustee such additional assignments, agreements, powers and instruments as
are required by the Trustee to carry into effect the purposes of this Agreement
or to better assure and confirm unto the Trustee or the Holders of the Notes
their rights, powers or remedies hereunder. If any Customer shall be in default
under any Lease Contract, upon reasonable request from the Servicer, the
Contributor will take all reasonable steps to assist in enforcing such Lease
Contract and preserving and maintaining title to the Lease Assets and the rights
of the Trustee and the Holders of the Notes therein against the claims of all
persons and parties to the extent the Contributor is capable of performing such
requested steps and the Servicer reasonably determines that the assistance of
the Contributor is necessary to effect the intent and purposes hereof.
Section 7.07. No Waivers; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Issuer or the Contributor, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise of any right, remedy, or privilege
hereunder preclude any other or further exercise hereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
Section 7.08. Binding Effect; Third Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto, the Holders
of Outstanding Notes, and their respective successors and permitted assigns.
Section 7.09. Set-Off. (a) The Contributor hereby irrevocably and
unconditionally waives all right of set-off that it may have under contract
(including this Agreement), applicable law or otherwise with respect to any
funds or monies of the Issuer at any time held by or in the possession of the
Contributor.
(b) The Issuer shall have the right to set-off against the Contributor
any amounts to which the Contributor may be entitled and to apply such amounts
to any claims the Issuer may have against the Contributor from time to time
under this Agreement. Upon any such set-off the Issuer shall give notice of the
amount thereof and the reasons therefor.
Section 7.10. Counterparts. This Agreement may be executed in one or
more counterparts all of which together shall constitute one original document.
In WITNESS WHEREOF, the Contributor and the Issuer have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the date and year first above written.
Sunrise Leasing Corporation,
Contributor
By /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
Sunrise Funding Corporation I,
Issuer
By /s/ R. Xxxxxxx Xxxx
Name: R. Xxxxxxx Xxxx
Title: President
